The decisive test in this regard is the existence of an "excess affinity", which is in addition to the ordinary interest of the shareholder in approving the transaction. And as the Honorable Justice noted, as he was described at the time, Amit "an excess connection on the part of an interested party is not sufficient in itself to establish a 'personal interest' for him, and 'the weight of the excess connection in relation to the transaction in question, against the background of the other circumstances of the case' must always be examined " ( Vardnikov at paragraph 32).
And to the extent that such a connection is found, and insofar as from Mr. Nehemiah's point of view the transactions in question with Mr. Knepfler and the Dayan Group were such that he has a personal interest in them, the provisions of section 270 of the Companies Law will apply to them, and they will have to be carried out in accordance with the special procedures prescribed in the law.
- There is no dispute that in our case the special procedures prescribed for approving transactions of an interested party were not complied with. For the purposes of continuing the analysis, I will assume in favor of Mr. Knepler and to the detriment of the defendants that such transactions were indeed discussed from Mr. Nehemiah's point of view. It should be emphasized that I am not determining that this is indeed the case, but I assume that this is the case. As we will see later in the analysis, this assumption does not change the conclusion that the claim should be dismissed.
It is also important to emphasize that all the elements of the personal interest that Mr. Knepler claims were open and known. They were revealed in the company's reports and reports. There is no dispute that the directors were aware of Mr. Nehemiah's personal guarantees, his control of the relevant companies, his salary and his separate interest in alleviating the company's dismal financial situation.
For the sake of analysis, I will assume that the defendants do not have the defense of the "business judgment rule"
- The parties disagree on the question of whether the defendants have the right to defend the "rule of business judgment".
As the Honorable Justice, as he was described at the time, as a colleague in the Verdnikov case , noted, "In essence, this rule grants the officer a kind of 'immunity' from the exercise of substantive judicial review of the content of the business decision that was made, when three conditions are met: first, the decision was made not out of a conflict of interest; The second is that the decision was made in good faith (subjective); and the third - the decision was 'informed,' i.e., after reviewing the data and weighing the relevant considerations (informed decision)" (paragraph 69 [emphases in original]). Those who meet the conditions enjoy, as a rule, a presumption of propriety, which will lead to a court not examining the business action on its merits.